Last week, I wrote two covered calls on the following positions.
IAMGold Corp (IMG.TO)
IAMGold has been the dog in my portfolio. When I first started the position in my portfolio, the stock was paying a healthy 5% yield and had a 5-yr dividend growth rate of 33%. But last year saw the decline in gold prices which started cutting into the operating margins at the company – which resulted in IAMGold suspending its dividends. I have continued holding the position as it is still a great company and continues to be one of the most efficient companies in the sector. However, the weakness has resulted with this stock ending up in the red and I have decided to sell it to move my commodities exposure to some other company. However, instead of directly selling at today’s prices, I decided to write covered call options instead and let the market decide for me. I wrote seven Sep 20th calls with a strike price of $5.00 resulting in a total of $49.00 in premium. If the stock stays below $5.00, I keep the premium. If it rises above $5.00, the option will get called and I sell and exit my position. Considering that this is high season for gold stocks, the likelihood of the stock going north of $5.00 is higher.
The Jean Coutu Group is a great stock, but with a current yield of 1.85%, I feel that there are better options out there. Although the stock has a great dividend growth rate, I have enjoyed a significant jump in unrealized profits. I ended up writing one Sep 20th call with a strike price of $22.00 resulting in a $30.00 premium.This adds $79.00 to my monthly income, which will handsomely bump up my overall passive income for the month of August.Disclosure: My full list of holdings are available here.